January 13, 2022

Supply chain challenges impact New Mexico utilities

Utilities across New Mexico are struggling to acquire equipment in a timely manner and major projects have been delayed amid problems with a sluggish global supply chain.

The New Mexico Public Regulation Commission is concerned that this could impact the utilities’ ability to maintain and repair utility infrastructure and provide services to customers. Commissioners discussed their concerns during Wednesday’s meeting. 

The state regulatory agency opened a docket to investigate the impacts of the supply chain challenges on utilities in October after learning from Public Service Company of New Mexico during the summer that the inability to get equipment was delaying a solar and battery storage project intended to replace the electricity the utility currently receives from the San Juan Generating Station. Since the docket opened, natural gas and electric utilities throughout the state have provided the PRC with information about how the slowdowns are impacting their operations and what they are doing to address those challenges. 

PNM provides regular updates to the PRC about its progress to find other sources of energy to fill the gap between the time when the San Juan Generating Station goes offline and when the solar project is operational. Its next report is due at the end of this month and the PRC issued specific requests for the utility to include in that report to help gauge what resources are available and what the plans are if there is a shortage of power this summer.

State regulators are concerned that PNM’s low reserve margin could lead to rolling blackouts or power outages if there is increased demand for electricity or if an incident causes a generation asset to go offline during a time when there is peak demand.

But the supply chain isn’t only impacting PNM.  

“The global supply chain disruption is causing extremely long lead times and higher than normal costs for JMEC in every area of operations but especially in the area of line construction and maintenance,” Jemez Mountain Electric Cooperative wrote in its response to the commission’s inquiry. “All material we use to construct power lines and the transformers we use to provide electric service to the public are seeing long delivery times. Our internal material inventory is lower than usual and not being able to acquire materials from suppliers is affecting our ability to replace old lines and construct new ones. JMEC is near the point of denying electric service due to not having transformers for the service.”

This response was highlighted during the commission meeting on Wednesday.

The utilities filed those responses in November and the commissioners received a summary of them in an agenda packet.

“I think this is cause for concern, not just from the standpoint of meeting the summer reserve margin, but responding to weather events and restoring power, doing just routine maintenance and obtaining replacement transformers that seem to be a very high demand across the board,” said Commission Chairman Joseph Maestas. “And so, I think this information is alarming. But the question for us is what do we do with it?”

Maestas brought up possibilities like approaching the congressional delegation and the state Legislature about the concerns or working to create regional agreements that utilities from other states could share surplus equipment to help get through the supply chain crunch.

“I think it’s incumbent upon us to really work with all the stakeholders and the state and federal government and legislative leadership to see if there’s anything that can be done to try and mitigate this. And it just seems that this is going to persist all the way through this calendar year and may see some relief in 2023,” he said.